Venture R&D Investment Surpasses Large Corporations, Leading Significantly in Employment and Sales as Well

Venture Companies Spend 4.9% of Sales on R&D, More Than Twice the 1.7% of Large Corporations
Domestic Industrial Property Rights Held by Ventures Total 273,725, Accounting for 53.6% of All

According to the "2020 Venture Business Detailed Survey" announced by the Ministry of SMEs and Startups, the ratio of research and development expenses to sales revenue of venture companies last year was 4.9%, significantly higher than the 1.7% of large corporations. Photo by Getty Images

[Asia Economy Reporter Kim Heeyoon] #Selcos, a supplier of display and industrial thin film deposition systems, employs over 100 full-time regular employees. The company developed the world's first green and eco-friendly surface treatment technology in 2017, and with the successful development and commercialization of eco-friendly technology replacing the conventional chemical plating process for printed circuit boards (PCBs), its sales rapidly increased, doubling its workforce. The number of employees grew from 21 in 2012 to 74 in 2016, and currently stands at 101. Baek Woosung, CEO of Selcos, recently received the Gold Tower Industrial Medal in recognition of his leadership in creating a stable employment environment.

#Caregen, a peptide-based bio company, is a technology-driven small giant holding nearly 350 peptide substance patents. Since its establishment in 2001, it has consistently launched high-profit filler products, with over 90% of total sales generated from export markets. Its hair filler product, effective against hair loss, performed strongly in European and Middle Eastern markets despite the impact of the COVID-19 pandemic. Operating profit in the third quarter reached 8 billion KRW, a 1.5% increase compared to the same period last year. Caregen completed a new factory in Hwaseong, Gyeonggi Province earlier this month. The company plans to expand its business areas through increased production capacity and research and development (R&D) investment.

Comparison of R&D Expenditure Ratio to Sales Revenue among Large Enterprises, Small and Medium Enterprises, and Venture Companies. Graph provided by the Ministry of SMEs and Startups

Venture Companies Show High R&D Ratios and Active Facility Investment

According to the '2020 Venture Business Detailed Survey' released by the Ministry of SMEs and Startups, the ratio of research and development expenses to sales for venture companies last year was 4.9%, significantly higher than the 1.7% recorded by large corporations. While the absolute amount cannot match that of large corporations, the proportion relative to sales is higher. The average facility investment by venture companies was 210 million KRW, a 71.1% increase from 122.7 million KRW the previous year. This is interpreted as an expansion of investment for securing technology and production.

As technological capabilities improve, the proportion of domestic industrial property rights and patents held by venture companies has also increased. Last year, venture companies held 273,725 domestic industrial property rights, accounting for 53.6% of the total. Patents increased by 68.7%, from 119,333 in 2018 to 201,406 last year, and utility model rights nearly tripled from 10,600 in 2018 to 28,257 last year. Based on this technological confidence, 20.9% of respondents rated the current technological level of venture companies as world-class or equivalent.

Distribution of Majors Among Venture Business Founders. Graphic provided by the Ministry of SMEs and Startups.

Excellent in Employment Stability... Many Founders with Engineering Backgrounds

As seen in the case of Selcos, the proportion of regular employees in venture companies increased from 96% in 2018 to 99.1%, a 3.1 percentage point rise, with the average number of non-regular employees per company being only 0.2. Although average salaries may not reach the level of large corporations, the quality and stability of employment are positive.

Notably, 67.1% of venture company founders were found to have engineering majors (engineers), reflecting the technology-centered nature of these companies. Other fields of study included business and economics at 17.6%, natural sciences at 6.4%, and humanities and social sciences at 5.9%.

Cha Jeonghoon, Director of the Startup and Venture Innovation Office at the Ministry of SMEs and Startups, emphasized, "Venture companies operate in fields where survival is difficult without research and development, so investing more in R&D is a fundamental necessity to compete with large corporations that have capital and human superiority. It is also noteworthy that Korean venture companies have maintained growth momentum and established a stable employment environment."

This content was produced with the assistance of AI translation services.